Experts agree automation is essential to managing the indirect tax lifecycle
Indirect tax administration will become more and more reliant on automation and technology if businesses are to keep up with the worldwide digitalization drive.
To pass international audits for indirect tax compliance, companies must drastically boost their utilization of technology, according to tax directors.
Technology should be a top focus for businesses, according to Nora Bafrouri, assistant director for EMEA indirect tax at manufacturing giant Trane Technologies in Brussels.
According to Bafrouri, who believes that indirect tax tasks will soon be completely digitalized, the indirect tax function does not have a future without technology.
For the purposes of stronger enforcement and more compliance, tax authorities around the world are increasing the digitalization requirements that apply to enterprises. The increased compliance load, according to a tax specialist at a large multinational in Dubai, has made it even more necessary for businesses to employ automation solutions.
He claims that authorities are now much more stringent in their enforcement procedures and frequently request a significant amount of verified transaction-level data in a brief period of time.
"Technology is not a nice to have, but a must have now," he continues.
Automation, according to a tax director at a major mining firm in London, helps tax departments and businesses achieve their goals.
According to him, "technology sits alongside things such as company policies, control frameworks, defined business processes, and controls in impacting indirect tax management."
The indirect tax lifetime is supported by these three pillars: Advisory and planning, tax determination, and compliance
The first pillar entails analyzing laws and regulations while making sure they are correctly applied to business transactions. The second pillar focuses on giving all company undertakings on internal processes, including ERP systems, the proper tax treatment.
"The second part means that it’s really important to make sure that we bill our customers correctly, otherwise we don’t get paid," adds Bafrouri.
The third pillar's major goal is to make sure that all transactions are reported promptly and in accordance with applicable laws.
Technology plays a crucial role in managing all three aspects of the tax lifecycle, according to Alex Bunnett, associate product manager at Thomson Reuters UK.
Each of these three sectors can benefit from technology in a different way, according to Bunnett.
He claims that there are research-based tools that assist in alerting tax teams to impending regulatory changes.
These are especially useful for multinational corporations since they lessen the strain of compliance and make sure they keep up with it.
They also accomplish this by releasing tax employees from having to monitor numerous regulatory changes in several jurisdictions and allowing them to concentrate on work that adds more value.
Systems that assist in automating legislative changes and applying such changes to each transaction in real time are currently advantageous to some businesses.
According to Bunnett, businesses can use technology to automate the consolidation and transmission of data to tax authorities while simultaneously streamlining their internal operations. This is crucial because governments all around the world are implementing